Earnings management in private family versus non-family firms. The moderating effect of family business generation

Borralho, João Miguel Capela; Gallardo‐Vázquez, Dolores; Hernández-Linares, Remedios

doi:10.1080/02102412.2019.1616480

Cited by 30 publications

(40 citation statements)

References 76 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…Earnings management was long considered to be a minor threat in private family firms due to the absence of strict financial targets, the ability of owners to access information directly and strong and personal relationships with debtholders. This was also supported by studies that compared family with non-family firms regarding earnings management (e.g., Achleitner et al, 2014;Borralho et al, 2020).…”

Section: Discussionmentioning

confidence: 65%

“…Furthermore, we also control for the mean level of SEW within each TMT by the variable SEW_GOALS_MEAN as previous studies indicate that the importance attached to the preservation of SEW in family firms could positively or negatively affect their decision to engage in earnings management (e.g., Calabrò et al, 2020; Capela Borralho et al, 2020; Stockmans et al, 2010).…”

Section: Methodsmentioning

confidence: 99%

“…To prevent that, private family firms that value SEW to a great extent would have more incentive to manipulate accounting numbers to conceal the real declining or poor financial situation (Gomez‐Mejia et al, 2014; Stockmans et al, 2010). Other studies indicate that family firms that attach more importance to SEW preservation want to avoid any damage to their reputational capital and are concerned for the long‐term value of their family firm, and therefore would engage less in earnings management (Capela Borralho et al, 2020; Cascino et al, 2010; Martin et al, 2016).…”

Section: Theory and Hypothesesmentioning

confidence: 99%

See 2 more Smart Citations

The effect of socioemotional wealth diversity within the top management team on earnings management in private family firms: The moderating role of the board of directors

2021

View full text Add to dashboard Cite

Using a unique multiple-respondent dataset of 218 individual managers of 37 private family firms, this study examines differences in the importance attached to socioemotional wealth (SEW) preservation among top management team (TMT) members as a determinant of earnings management. Such SEW diversity might cause conflicts that can harm TMT decision-making quality and, ultimately, firm performance, which the TMT might cover up by engaging in earnings management. Furthermore, we examine to what extent a board of directors that functions as a sounding board is able to mitigate the relationship between SEW diversity within the TMT and earnings management.

show abstract

Section: Discussionmentioning

confidence: 65%

Section: Methodsmentioning

confidence: 99%

Section: Theory and Hypothesesmentioning

confidence: 99%

See 1 more Smart Citation

The effect of socioemotional wealth diversity within the top management team on earnings management in private family firms: The moderating role of the board of directors

2021

View full text Add to dashboard Cite

show abstract

“…Paiva et al [30] mentioned that the outcomes of these two agency problems are incentives and disincentives for accounting transparency and earnings management practice. In addition, Borralho, Vázquez and Hernández-Linares [32] explained that family business status mitigates the two agency problems.…”

Section: Opportunistic Effect Of Csr On Earnings Managementmentioning

confidence: 99%

Doing Good with Creative Accounting? Linking Corporate Social Responsibility to Earnings Management in Market Economy, Country and Business Sector Contexts

2019

View full text Add to dashboard Cite

The mandate of doing good with earnings management has been a subject of inconclusive findings from the past literature and leave issues on the benefits of socially responsible activities and financial reporting of the company. This study investigates the effects of corporate social responsibility (CSR) on accrual-based (AEM) and real-activities earnings management (REM). This study hypothesized that the trade-off exists between these two earnings management strategies, in light of increasing attention of CSR among Asian firms. In addition, this study examines whether the performance of firms in socially responsible activities exhibit different patterns of effect across the two measures of earnings management under the market economy, country, and business sector contexts. This study contemplates on 3906 firm-year observations from 2011 to 2017 of eleven countries in Asia. Our findings show that CSR conceals AEM while it constrains REM. These effects vary according to the market economy classifications, country, and business sector types. Each market, country and business sector has different standpoints in implementing CSR activities and earnings management relevant to the culture, macroeconomic considerations and demands from the stakeholders. Lastly, the discernment on the relevance of building corporate citizenship on financial reporting transparency is elaborated.

show abstract

“…In future, research can be carried out in private owned firms for finding what factors motivate managers of such firms for earning management in Pakistan. As one of the study done by (Borralho, Vázquez, & Hernández-Linares, 2019) views such firms to be less involved in EM practices, particularly due to long term earning quality, family name and smaller separation of ownership and control in such firms. Further, a relative study can also be conducted to see how IFRS moderates the relationship of earning management and financial decisions in developed and developing countries.…”

Section: Future Directionsmentioning

confidence: 99%

An Inquiry into Earning Management Motives: Evidence from Pakistani Distressed and Non-Distressed Firms

Aman

Jan

Ullah

et al. 2019

NRJSS

View full text Add to dashboard Cite

This research takes in view the motives that drive opportunistic managers in the Pakistani corporate world to manipulate firm earnings in different financial circumstances by resorting to real (REM) and accrual (AEM) earning management to reap their self-interests. The present study undertakes 188 distressed and 37 non-distressed firms for the sample period of 2010-2017. The summary stats confirm that both in distressed and non-distressed firms’ managers resort to REM practices more than AEM. The factors that urge mangers to take REM practices in distressed firms i.e., debt covenant restriction, managerial ownership and tax avoidance needs to be amended in such a way that it demotivates managers for carrying such practices in distressed firms. The factors that influence AEM practices in distressed firms are debt covenant restrictions, institutional ownership, highly valued firms and managerial ownership whereas in non-distressed firm these factors are debt covenant and effective tax rate. In non-distressed firms motives that urge mangers to adopt REM, practices are raising additional capital and tax avoidance practices.

show abstract

Earnings management in private family versus non-family firms. The moderating effect of family business generation

Cited by 30 publications

References 76 publications

The effect of socioemotional wealth diversity within the top management team on earnings management in private family firms: The moderating role of the board of directors

The effect of socioemotional wealth diversity within the top management team on earnings management in private family firms: The moderating role of the board of directors

Doing Good with Creative Accounting? Linking Corporate Social Responsibility to Earnings Management in Market Economy, Country and Business Sector Contexts

An Inquiry into Earning Management Motives: Evidence from Pakistani Distressed and Non-Distressed Firms

Contact Info

Product

Resources

About